Correlation Between Empire Metals and Summit Materials
Can any of the company-specific risk be diversified away by investing in both Empire Metals and Summit Materials at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Empire Metals and Summit Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Empire Metals Limited and Summit Materials Cl, you can compare the effects of market volatilities on Empire Metals and Summit Materials and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Empire Metals with a short position of Summit Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Empire Metals and Summit Materials.
Diversification Opportunities for Empire Metals and Summit Materials
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Empire and Summit is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Empire Metals Limited and Summit Materials Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Materials and Empire Metals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Empire Metals Limited are associated (or correlated) with Summit Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Materials has no effect on the direction of Empire Metals i.e., Empire Metals and Summit Materials go up and down completely randomly.
Pair Corralation between Empire Metals and Summit Materials
Assuming the 90 days trading horizon Empire Metals Limited is expected to generate 2.59 times more return on investment than Summit Materials. However, Empire Metals is 2.59 times more volatile than Summit Materials Cl. It trades about 0.07 of its potential returns per unit of risk. Summit Materials Cl is currently generating about 0.06 per unit of risk. If you would invest 165.00 in Empire Metals Limited on September 20, 2024 and sell it today you would earn a total of 460.00 from holding Empire Metals Limited or generate 278.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.58% |
| Values | Daily Returns |
Empire Metals Limited vs. Summit Materials Cl
Performance |
| Timeline |
| Empire Metals Limited |
| Summit Materials |
Empire Metals and Summit Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Empire Metals and Summit Materials
The main advantage of trading using opposite Empire Metals and Summit Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Empire Metals position performs unexpectedly, Summit Materials can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Summit Materials will offset losses from the drop in Summit Materials' long position.| Empire Metals vs. Givaudan SA | Empire Metals vs. Antofagasta PLC | Empire Metals vs. Ferrexpo PLC | Empire Metals vs. Atalaya Mining |
| Summit Materials vs. Samsung Electronics Co | Summit Materials vs. Samsung Electronics Co | Summit Materials vs. Hyundai Motor | Summit Materials vs. Reliance Industries Ltd |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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